But in a staggering show of defiance Mr Diamond, 60, insisted he was staying
put.

The Barclays boss was savaged by politicians, financiers and homeowners
yesterday over the bank’s shameful rate-fixing “robbery”.

And last night rumours were rife he may be forced to fall on his sword TODAY.

One bank customer who lost his house as mortgage rates soared said: “I am
incandescent with rage over this. Bob Diamond should be in a police cell now
answering questions about who he was in charge of. Aren’t we all sick of
this?”

This morning, Bank of England governor Sir Mervyn King said the culture in
British banking must change, blasting “excessive levels of compensation
to shoddy treatment of customers to a deceitful manipulation of one of the
most important interest rates”.

He said: “What I hope is that everyone, everyone, now understands that
something went very wrong in the banking industry and we need to put it
right.”

Hundreds of bankers across three continents are embroiled in the interest-rate
fixing scandal, it has emerged.

MPs heard that a string of at least 20 financial institutions worldwide are
under suspicion  with growing demands for a criminal investigation.

Last night, PM David Cameron said those responsible for the fiddling should be
held accountable “all the way to the top”.

Labour leader Ed Miliband called for guilty bankers to be locked up.

London mayor Boris Johnson blasted “very, very dodgy practices”.

And even ex-Barclays boss Martin Taylor accused the bank of “systematic
dishonesty”.

The scandal erupted four years after RBS boss Fred “The Shred” Goodwin quit
after the bank made record losses of £24billion.

Fury swept the nation after City watchdogs the FSA and US authorities fined
Barclays a record £290million for rigging the rate at which banks lend to
each other, known as Libor.

Rogue traders sometimes LOWERED it to give the illusion of a strong
bank, relative to rivals.

And they sometimes RAISED it to ramp up profits — and their own
bonuses. Emails exchanged between staff showed they rewarded each other with
bottles of Bollinger champagne.

In one, an external trader said to a Barclays trader: “If (Libor) comes in
unchanged I’m a dead man.”

Later he emailed: “Dude, I owe you big time! Come over one day after work and
I’m opening a bottle of Bollinger.”

Increased rates can hike the cost of a mortgage or loan, crippling
cash-strapped homeowners and struggling businesses.

Barclays’ shares plummeted by 15.5 per cent yesterday, wiping more than £3BILLION
off the company’s market value.

Yet last night defiant Mr Diamond, 60, insisted he was going nowhere. He sent
a letter to MPs on the Treasury Committee agreeing to be grilled by them —
but suggested the the scandal had nothing to do with him.

He said: “This inappropriate conduct was limited to a small number of people
relative to the size of Barclays’ trading operations. And the authorities
found no evidence that anyone more senior than immediate desk supervisors
was aware.”

He pledged to “work every day to rebuild the trust that has been damaged by
these actions”.

Barclays is the first bank to get caught but up to 20 others are being
investigated across Europe and America. The Libor rate affects the cost of £357TRILLION-worth
of financial contracts around the world.

Mr Diamond was in charge of Barclays’ investment banking arm when the fiddling
happened between 2005 and 2009. It is this department investigators have
been focusing on.

Mr Diamond, the UK’s highest-paid CEO with a £20.9million package last year,
has admitted fault and agreed to give up his 2012 bonus.

But that was not nearly enough for a host of critics who lined up to blast
him.

Customers flooded web forums and radio phone-ins calling for him to be axed.
Graham from Manchester, the homeowner who wants Mr Diamond in a police cell,
told how he lost his house four years ago after his bank rate jumped from
4.4 per cent to 9.65 per cent.

He said: “I would happily form a mob if the Government and police won’t accept
the great unwashed of this country deserve some justice.”

Richard Murphy, of Tax Research UK, said: “They knew they were abusing the
rules for personal profit.”

Chancellor George Osborne said Mr Diamond had “very serious questions to
answer”. And Business Secretary Vince Cable warned the Government could
force the boss to go through “last resort” powers on director
disqualification.

Q&A

WHAT was Barclays guilty of?

It was caught rigging the Libor (London Interbank Offered Rate). The Libor is
the interest rate which banks charge to borrow from each other. It affects
the cost of financial contracts from mortgages to loans.

WHO was involved?

Between ten and 20 rogue dealers, according to the Financial Services
Authority, in a four-year period up to 2009. None of them has been named.

WHY did they do it?

The bankers raised and lowered the Libor rate to suit their needs. At times
they plotted to keep the Libor rate low to make their bank look good. A high
rate suggests a bank is weaker than its rivals. At other times the bankers
raised the Libor to boost their profits — and their own individual bonuses.

WHAT does manipulating the rate mean for customers?

Increasing the Libor rate can increase the cost of a mortgage or loan by
hundreds of pounds, crippling cash-strapped home owners and struggling small
businesses.

HOW were bankers caught?

The Financial Services Authority found a series of explosive emails in which
traders begged for favours to manipulate the Libor rate, in exchange for
bottles of Bollinger champagne — or even coffees.

ARE other banks doing this?

Barclays is the first to get caught, but the FSA is investigating up to 20
others banks. The Royal Bank of Scotland, Lloyds and HSBC say they are
helping the watchdog with their inquiries.

George Osborne: Other UK banks are facing quiz

By EMILY ASHTON

THE Barclays rate-rigging scandal is just the tip of the iceberg, George
Osborne revealed yesterday.

The Chancellor said Britain’s biggest banks were facing the threat of a
criminal investigation in what could prove to be the biggest scandal ever to
hit the City.

Mr Osborne told MPs: “It is clear that Barclays — and potentially other banks
— were in flagrant breach of their duty to observe proper standards of
conduct.”

Taxpayer-owned Royal Bank of Scotland and Lloyds could be hit with
eye-watering fines. HSBC is also being investigated by the Financial
Services Authority. Its shares fell 2.6 per cent yesterday, down 14.8p to
finish at 558p.

Other financial institutions believed to be under investigation include UBS of
Switzerland, Deutsche Bank, JP Morgan and Citigroup. Barclays is the first
to settle with regulators over the Libor rigging.

At least a dozen banking groups across the world are thought to be caught up
in the inquiry.

The FSA is working with the European Commission and US authorities, as well as
the Swiss, Japanese and Canadian regulators.

The Libor inquiry began in the US in late 2008 but evidence shows the rate was
manipulated well before the financial crisis.

myView

By TOM NEWTON DUNN, Political Editor

NEVER in the past four miserable years have bankers been more hated than now.

The rates scandal has set a new high for City arrogance, selfishness and
deceit.

But why have so few been punished for the gross greed that plunged the world
into such a mess?

The ironic answer: The world needs these shameless but very clever sewer rats
to drag us out of the deepest financial crisis in a century.

It’s also why successive governments were terrified of penalising bankers, in
case they left and took their jumbo tax takings and growth potential with
them. That must stop today.